University finances

An overview of the University's current financial position, the financial scenarios we are modelling as we look to next term and information on the steps we all must take to protect and improve the University’s financial position.

18 May 2020: A message from our Chief Financial Officer

Dear colleagues

For those of you who don’t yet know me, I joined the University of Sheffield as Chief Financial Officer at the beginning of February. It is safe to say I never anticipated to be writing to you all for the first time in these circumstances and I want to thank you in advance for taking the time to read and digest this important information.

This update will provide an overview of our current financial position, let you know the financial scenarios we are modelling as we look to next term and give information on the steps we all must take to protect and improve the University’s financial position.

Our current financial position

As is the case for all universities, the Covid-19 pandemic has had a significant impact on both our current income and our financial forecasts for the next academic year.

Since we closed University buildings in March, we have lost over £10 million in income from student residences, conferences, catering and sports activities. We have also seen some pauses in research income from funders.

While these losses are significant, from the measures we have already taken, the University has been able to manage them well and it is our projections for next year that need greater attention.

Our projections for next year

Looking to the next academic year, our latest financial forecasts show that, prior to Covid-19, we expected to receive £780 million of income during the next academic year. This would be made up of £346 million of course fees, £87 million of funding council grants, £238 million of research grant income and £110 million of other income. Of the £346 million of course fees, £177 million relates to international student fees.

Although we are receiving an encouraging level of international student applications, we are aware that the Covid-19 pandemic may impact on a student’s ability to travel to the UK for study, which may in turn affect their decisions. There is also a risk that some home students may choose to defer study as a result of the pandemic.

We have looked at two potential recruitment scenarios:

  • Firstly – no international students study at the University, broadly the same as only 50 per cent of total tuition fees received. This results in a £162 million reduction in cash received.
  • Secondly – 50 per cent of the international intake and 25 per cent of the Home/EU new intake are not recruited. This results in £70 million reduction to our cash received.

If these students are not on campus we will also see reductions to residential, catering and sports income. Although actual recruitment in September may differ from these figures, they do show the large amount of income at risk.

Actions we have taken so far

It is due to this high level of uncertainty and the potential high value of this loss of income that we have introduced a number of immediate measures to build our cash balances as much as possible. These include:

  • All new staff posts or extensions to existing staff contracts will be reviewed and approved by a new Recruitment Advisory Panel chaired by the Deputy Vice-Chancellor.
  • Non-pay expenditure is restricted to essential spend only. We have a task and finish group working on guidance for colleagues which will be available at the end of this month. Until this guidance is released please only commit expenditure if it is absolutely essential and essential that it is required now.
  • Capital projects have been paused and are restricted to projects with contractual obligations only.
  • We have reviewed and made changes to our reward and recognition process for 2020. More information will be shared with you this week.
  • We are accessing available government support through the Job Retention Scheme, advance payments from the Student Loans Company, and the Quality Research payments. We are keeping under review the need to apply for the Covid-19 Corporate Financing Facility, a scheme to help large businesses affected by coronavirus (Covid-19) through the purchase of their short-term debt. This is not an immediate requirement for us as we have a revolving credit facility already in place.
  • We are looking at the areas where we can increase student numbers by up to five per cent as part of the conditions announced around the new cap on student recruitment for 2020-21.
  • We are also engaging with the government around the opportunities for further support for crucial research.

Alongside this, we will start to prepare further actions that could be taken to mitigate a £100 million shortfall in income. This work is being progressed and we will keep you informed as plans develop.

How we can all support a sustainable financial position

All of us need to do everything we can to support a sustainable financial position for our University. It is really important that in all you do, you consider what is and isn’t essential spend. Your efforts to do this so far are really appreciated; please continue as this will make a significant difference.

We also all need to play a part in developing the best online education possible, the safest campus and to let students know how committed we are to their education, development and graduate opportunities. Acting as advocates and promoting the University in the best possible way will help to maintain our position as a globally-leading university.

There has already been a fantastic effort from colleagues across the University to develop and deliver student recruitment activity online. We really must continue to prioritise this work given the potential high loss of income in this area.

Thank you for everything you are already doing to protect and improve the University’s financial position. I will continue to keep you updated so that you have the information you need to help the University in these challenging financial times.

With thanks

Jo Jones
Chief Financial Officer


Frequently asked questions

Why are we expecting a fall in income and how much do we need to save?

Our working forecast is a savings target of £100 million. This shortfall has arisen as a direct consequence of the Covid-19 pandemic and the expected reductions in home and overseas undergraduate and postgraduate students joining the University at the start of the 2020–21 academic year. This will directly impact the University’s income from tuition fees, but also from commercial activity such as accommodation, hospitality and sports facilities.

What cost saving measures are we taking?
  • Capital expenditure has been paused for all projects unless they are contractually committed or considered essential for the University.
  • Non-pay expenditure is restricted to essential spend only.
  • All new staff posts or extensions to existing staff contracts are being reviewed and approved by a new Recruitment Advisory Panel chaired by the Deputy Vice-Chancellor.
  • We introduced a Voluntary Severance Scheme, which closed on 1 July. Based on the applications we have received, the VSS will save a projected maximum of around £12 million in 2020-21.
  • There are also other mechanisms for staff to voluntarily reduce their working commitment through temporary reductions in hours, purchase of annual leave or a period of unpaid leave, should it fit with their personal circumstances
  • We have reviewed and made changes to our reward and recognition process for 2020.
  • We are looking at the areas where we can increase student numbers by up to five per cent as part of the conditions announced around the new cap on student recruitment for 2020-21.
What support are we getting from the Government?

We have already accessed the government’s Coronavirus Job Retention Scheme to furlough nearly 900 staff. This has saved us over £1.6 million so far.

The government package of support for research may bring us some benefit. For example, we hope that a grant extension scheme will provide us with money to extend some of our research projects and extend the contracts of staff working on those projects so that they can complete the research that has been impacted by Covid-19. This is welcome news as it helps to protect our important research, but it doesn’t address our financial challenges.

We are awaiting details on the other support announcement by the government to support research in the form of grants and loans, but we do not yet know how much funding might be available to us, whether the measures announced will be fully accessible to us or the government’s terms of such funding.

We are also accessing available government support through advance payments from the Student Loans Company, and Quality Research payments. We are keeping under review the need to apply for the Covid-19 Corporate Financing Facility, a scheme to help large businesses affected by Covid-19 through the purchase of their short-term debt. This is not an immediate requirement for us as we have a revolving credit facility already in place.

Why has the University decided to renew its commitment to the Student Lifecycle project?

The University Executive Board, Finance Committee and Council have recently approved the Student Lifecycle Programme (SLP) for a revised delivery date of 2021. Clearly, this decision has been taken in a context where, as a University, we face numerous challenges caused by the Covid-19 pandemic. Whilst we must remain sensitive to the unprecedented situation we find ourselves in, we must also ensure that we can continue to support students by having the robust systems and processes in place that the SLP will deliver. We face significant issues with the sustainability of our current student system and failure to address these in a timely manner will expose the University to considerable unnecessary risk.

The programme has undergone a number of changes in recent months and in the coming weeks, we will be sharing more information about these changes, as well as details about the plans and timeline for delivery. In the meantime, you can find further information on the SLP Google Site.

What are other universities doing?

We are not alone in the sector in facing financial challenges as a result of the Covid-19 pandemic, and many other universities are exploring options similar to those that we are considering. This is also true of organisations in other sectors.

How can I help support the University to achieve a sustainable financial position?

It is really important that in all that you do that you consider what is and isn’t essential to spend. Your efforts to do this so far are really appreciated; please continue as this will make a significant difference.

Depending on your role, you can also help by supporting key activities such as developing the best online education possible, creating a safe campus and letting students know how committed we are to their education, development and graduate opportunities. Acting as advocates and promoting the University in the best possible way will help to maintain our position as a globally-leading university.

There has already been a fantastic effort from colleagues across the University to develop and deliver student recruitment activity online. We really must continue to prioritise this work given the potential high loss of income in this area.